Chinese online Grocery Apps aim to raise $500 million each with U.S. IPOs

This post was originally published by Zinnia Lee, Forbes Staff at Forbes (Business)

Two Chinese online grocery delivery apps are heading for public listings in the U.S. that could raise $500 million each to bolster their war chests at a time when tech giants like Meituan and Pinduoduo, among others, are joining the fray.

MissFresh

Backed by Tencent, filed for an initial public offering on Nasdaq on Tuesday. The company did not disclose any fundraising details nor its listing schedule in the filing, and used a placeholder $100 million sum to calculate filing fees.

Founded in 2014, MissFresh offers more than 4,000 types of fresh produce ranging from fruits, vegetables, meat, seafood, snacks to personal care products on its mobile platform. The Beijing-based firm said its average time for delivering orders to its customers’ doorsteps was 39 minutes. Its wide variety of products and efficient service has attracted more than 31 million paying customers as of March 2021. Its gross merchandise value (GMV) topped $1.16 billion last year, a 0.2% jump from 2019.

MissFresh has been unprofitable for the past three years. It reported a net loss of $252 million for 2020 on revenue that rose 2.2% to $936 million. The online grocery said it had achieved its unicorn status in 2017. It counts U.S. investment bank Goldman Sachs and Beijing-based venture capital firm Genesis Capita among its backers.

MissFresh did not respond to a request for comment on its plans for a public listing.

Dingdong Maicai

Bcked by Japanese tech conglomerate SoftBank, on Tuesday also filed for a preliminary prospectus for an IPO on the New York Stock Exchange. The firm did not disclose details like the size of the IPO and its timetable in the filing, but it used a placeholder $100 million sum to calculate its filing fees.

Established in 2017, Dingdong Maicia offers a wide variety of products similar to MissFresh. The Shanghai-based company said its delivery time is down to just 29 minutes. The online grocery store serves an average of 6.9 million monthly buyers in the first quarter of 2021. Its GMV skyrocketed 177.7% in 2020 from a year ago to almost $2 billion.

Dingdong Maicia has also been struggling to earn a profit in the past two years. The firm recorded a net loss of $485 million in 2020, although its revenue reported a 192.2% raise from 2019 to $1.7 billion. Dingdong Maiciai did not respond to a request for comment on its IPO.

The Chinese fresh food e-commerce market recorded a 64% surge in 2020 from a year ago to $71.7 billion thanks to coronavirus lockdowns and social distancing rules, according to iResearch. That figure is forecast to soar 161% to almost $187 billion in 2023. Such heady growth attracted the attention of tech heavyweights Meituan and Pinduoduo, which launched Meituan Select and Duo Duo Maicai, respectively, last year to offer online grocery delivery services.

Yet, the increasingly fierce online grocery competition has caused Chinese authorities to raise their eyebrows. The State Administration of Market Supervision said in March that it had decided to impose a $230,000 fine each on Meituan Select and Pinduoduo’s Duo Duo Maicai, among others. The regulators accused the platforms for disrupting market order with price incentives, as well as using false or misleading price tactics.

Both MissFresh and Dingdong Maciai expressed concerns about Beijing’s anti-monopoly regulations in their filings. The former warned investors that the company could be subject to antitrust investigations, while the latter alerted investors that the regulations could have an adverse impact on its business.

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This post was originally published by Zinnia Lee, Forbes Staff at Forbes (Business)

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